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Ariad Sets The Ball Rolling For Blockbuster Drug

 December 17, 2012 01:03 PM

(By Mani) Ariad Pharmaceuticals Inc.'s (NASDAQ: ARIA) approval of ponatinib (Iclusig) is a major achievement that should set the company on the road to commercializing a long-term blockbuster drug.

Ponatinib is indicated for the treatment of adult patients with chronic, accelerated or blast phase chronic myeloid leukemia (CML) that is resistant or intolerant to prior tyrosine kinase inhibitor (TKI) therapy or Philadelphia chromosome-positive acute lymphoblastic leukemia (Ph+ ALL) that is resistant or intolerant to prior TKI therapy.

The good news is the labeled indication is very broad and requires only failure/intolerant to a prior drug. If Ariad's claim is to be believed, about 5,000 new cases of CML are diagnosed each year in the U.S., and patients treated with TKIs can develop resistance or intolerance over time to these therapies.

[Related -Ariad Pharmaceuticals, Inc. (NASDAQ: ARIA): Rocking and Rolling on Iclusig]

However, there are concerns on warnings for arterial thrombosis and liver toxicity that can lead to dose reduction and/or discontinuation. However, one should note that the label includes all adverse events in the single arm trial, where it is impossible to delineate which are directly attributable to the drug, especially in these heavily pre-treated patients.

"We think launch will be fine and meet expectations due to a large prevalence pool, and ‘113 data at ASCO should be a positive catalyst," RBC Capital Markets analyst Michael Yee wrote in a note to clients.

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The oncology company commented that event rates drop by 50 percent in earlier line patients. Moreover, Novartis' Tasigna, which has a black box for Quantum Tunneling Composite (QTc) and sudden death, is a blockbuster drug, and box warning has not stopped its significant utilization despite lower efficacy than ponatinib. QTc is nothing but a measurement of a portion of heartbeat.

"Long term thinking on ponatinib unchanged: very high efficacy supports use in the broad population, and for an oncology indication, efficacy is key and physicians we spoke to are comfortable with the safety profile of the drug," Yee noted.

In addition, liver function tests such as ALTs (alanine aminotransferase) and ASTs (aspartate aminotransferase) are comparable to other TKIs, and Ponatinib has no QTc effects, unlike Tasigna.

"We believe the labeling is unlikely to affect physician adoption, or enrollment rates for EPIC (first line trial vs Gleevec), which we note has an interim at 50% enrollment completion, potentially putting data YE:13 or H1:14 (and should show perceived safety concerns today aren't real issues)," Yee noted.

The drug is being priced at $9580 for one month or Wholesale Acquisition Cost of $115,000, and would be with distributors in 2 weeks, and marketing materials approved in next 45 -60 days.

"With approval 3 months early, (we model only 40 of 100 early access patients, so more will be upside), we believe launch will meet/beat 2013 cons est of $37-$40M (US)," Yee added.

Ariad's approach to structure-based drug design has led to three internally discovered, molecularly targeted product candidates for drug-resistant and difficult-to-treat cancers, including certain forms of chronic myeloid leukemia, soft tissue and bone sarcomas, and non-small cell lung cancer. Ariad's primary value driver is ponatinib for the treatment of CML. The company is also partnered with Merck on ridaforolimus for sarcomas.

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